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Thursday, 20 June 1946

Mr SCULLY (Gwydir) (Minister for Commerce and Agriculture) . - by leave - I move -

That the bill be now read a second time.

Wheat has been atroubled industry for. many years.For a decade before the war,, it was frequently in a depressed condition and constant assistance from governments was required. Prices were low and growers could not obtain a reasonable living from their labour. Other wheats producing countries were in a similar plight, and wheat presented the world's greatest agricultural problem-. The need for stabilization in Australia was recognized by the governments, but it is beyond the power of any Commonwealth government to stabilize the industry alone. Joint action by all Australian governments is necessary, because both States and Commonwealth are vitally affected by matters concerning the wheat industry. Although the problem is an old one, up to date it has not been possible to get agreement on a plan, and the method of operating it.

The bill which I now present to the House is intended to give security to the wheat industry in Australia. It provides growers with a guaranteed minimum price for wheat for five years, and has. the machinery to maintain minimum price guarantees as a permanent feature. The effect, will be to remove the feature which disturbed the industry most in the past; that is, the impact of unduly low prices. It will be replaced by a system under which wheat farmers will know, for a period of years in.advance, that they will receive a definite price for their wheat. They can plan their farm programme with an assured return, and with the knowledge thatthey will not be ruined by market changes which cannot be foreseen or controlled. The stabilization proposals represent the considered judg- ment of governments and growers, first, as to the measures needed for the industry, and, second, as to the best way to effect them. Co-operation with the States is an essential part; of the plan. The States' control production, and production must be regulated according to the markets available for our wheat. In marketing, Commonwealth and States must use their constitutional powers in harmony if the plan is to be effective; neither can provide effective marketing unaided. In the plan now proposed, the States have shown their willingness to co-operate with the Commonwealth. It has been discussed in detail with State governments, and they have agreed to bring complementary legislation before their State parliaments to bring it into force.

The Government has consulted, wheatgrowers' " organizations'. The plan was discussed with the "Wheat 'Growers Federation in December last, and growers' views on its details were then expounded fully. The various points stressed by representatives at thi? meeting received consideration and it has been possible to meet them in full. The bill therefore represents the greatest practicable measure of co-operation between governments and growers to settle the problem of the wheat industry.

The plan provides a minimum guaranteed price for wheat for the period 1945-46 to 1949-50, five seasons. It also provides for review during the currency of the scheme, with a view to its extension beyond the five years. Growers will contribute to a stabilization fund, when prices are high, and the. contribution will be not more than 50 per cent, of the excess of the export price above the guaranteed minimum price. The Commonwealth will meet out of general revenue any deficiency in any one year should the stabilization fund become exhausted. A central marketing organization will be responsible for the marketing of the Australian wheat crop, and production will be regulated in accordance with the markets available. The guaranteed price for the five seasons, 1945-46 to 1949-50, is 5s. 2d. a bushel f.o.r. ports for f.a.q. bagged wheat. This minimum will apply to the whole of the marketed crops. At present, a home-consumption price applies to wheat used locally for flour. This will be. extended to cover other wheat used locally. There is, in addition, the very important point of the guarantee for our export wheat. Control over local wheat prices is always possible, but the grower will now .get protection against the slumps which have been a regular feature' of world markets, and the Commonwealth will take a financial risk to give that protection. It is intended that the guaranteed price will apply for five seasons, but, as I have already mentioned, before the period is up, the plait will be reviewed, and a fresh guarantee given for a further period. The intention is to have regular reviews, and to maintain always a guaranteed price for some seasons ahead. The first period has been fixed as a reasonable period of security and a reasonable period for a fixed commitment. The guaranteed price is the minimum return, and growers will get more when export prices are high. They are given a definite floor price.

A contribution from growers is provided for. It is considered that, in principle, a government guarantee, which is really a guarantee from the general taxpayer, should be accompanied by contributions from growers when prices are high. This principle is accepted by growers and a 50-50 contribution. is generally conceded to be fair. When prices are high, growers will contribute up to 50 per cent, of the excess above the guaranteed price of export wheat. The money so subscribed will go into a stabilization fund, and will be u?ed to meet the guarantee when prices fall. The fund will be a trust fund, and it should be noted that the growers' contribution is a maximum of 50 per cent. There is no intention of building up an excessively large fund, and, if prices remain higher than is now expected, the contribution will be reduced below 50 per cent. The effect is that growers will make a reasonable contribution, but not an excessive one, and the Commonwealth will meet the guarantee if a run of low prices exhausts the fund. This means that growers will share in the extra amounts from highprice years, and they are assured in advance against a price below 5s. 2d.

It is not proposed, nor intended, that returns shall be permanently out of line with the export price, nor that the industry will be continually subsidized. Twothirds of our wheat goes on to the export, market, and we must compete with other countries for our markets. The plan gives time for adjustments to meet changing world conditions, and it protects growers against a. rapid fall on the export, market. It cannot relieve them of the need to meet world competition in the export trade. It is hoped, however, that a!n effective international agreement will protect export markets in future. For the next five years, however, come what may in the export field, growers are guaranteed against the effect of "a. world slump. They will not receive in any one of the five years less than 5s. 2d.

The difficulties of making a guarantee effective can hardly be overcome without a central organization for marketing. Consequently, a wheat board will he set up to handle and sell the crops. Here we have the benefits of our war-time experience, and of an efficient organization which has met all war-time difficulties. It is established, its working is familiar, and wheat-growers want to keep it. The marketing board will succeed the wartime "Wheat Board and carry on its work. In its new set-up it will operate under joint powers conferred by Commonwealth and States, and it will be realized that the statutory power to operate will relate almost entirely to wheat covered by the State acts. The operation of the new board was one important part of the discussion with the States as they particularly affect our State partners in this plan.

Regulation of production is a part of the plan in which action would be impossible without full State co-operation. The long history of wheat gluts and wheat shortages has shown how easy it is to go from one extreme to the other. Wheat gluts build up fast, and the low prices which result have had a disastrous effect in past years on wheat farmers here arid overseas. Over-production is one thing which must be avoided in the future. We wish to produce all the wheat we reasonably can, and to sell it at a price fair to growers and consumers. We want also to avoid temporary high-price expansion in the industry which would leave it overcapitalized and unable to carry on when prices recede. Deliberate regulation according to markets available is a new departure, but it offers the best prospect for avoiding a return to the disastrous see-saw from glut to scarcity. For the industry to be healthy, prices must" be neither in the pit nor in the clouds. Superficially, it may seem odd at the present time to be thinking of regulating wheat production. Australia is now trying to produce the maximum crop from the coming harvest, and to supply everything possible to meet overseas needs. But we must also prepare for whatever may come in the future, and it is likely that, within a short time, the old familiar condition of a wheat glut may recur. If it does, our farmers will again be faced with depression, and the precautious against that must be taken now.

Our normal pre-war basis of production can be maintained and it will be practicable to include in the -industry soldier settlers and farmers' sons. I have hopes also that conditions of world trade in the years to come will give an outlet for all the wheat whicli Australia can produce. If so, there will be room for expansion to the limit of our economic productive capacity. It must, however, be realized that farmers cannot go into the wheat industry one season, and out of it the next. Once in it, they are committed to heavy outlay and years of production. Boom years are a menace because of the danger of high land prices and over-capitalized farms, leading to a financial structure which is. not able to meet low or medium price years. For that reason, the production basis must be decided with the greatest care.

The stabilization plan is intended to. make the wheat industry sound financially. Regulation of production - not restriction of production - has been recognized over the years as one requisite for any plan. That is recognized not only by the governments concerned, but by the growers ; and growers are willing to cooperate in regulation of the industry to secure the wide benefits of stabilization. Regulation of production ' is another feature which was brought in as a wartime measure, and now can readily be adapted to peace-time needs. It is a State function, and Commonwealth and States will co-operate to secure uniformity in administration. The experience gained by State officers during the war years, while they were co-operating to carry out Commonwealth policy, will be invaluable in the future in carrying out the joint policy.

Special mention should be made of the need for co-operation between Australian governments in this- question. Commonwealth and States have their separate powers, and, by using them together, the plan can be carried into effect. Used separately, the constitutional powers of the governments .are not capable of dealing with the problem. The plan represents a high degree of co-operation' between Australian governments, and it provides for a partnership in which all of them will play .an effective part, not only in deciding the policy but also in carrying it out. The States will use their powers in State marketing and in controlling production, while the Commonwealth powers for external trade will supplement them. The common object is to deal with the industry on an Australian basis. This can be done without infringing the special interests of the different States, and the Australian Agricultural Council .provides a ready means of discussing the different problems which must arise from time to time. I have mentioned that the detailed draft legislation had been discussed with State Ministers after the principles had been submitted to the Premiers conference. .

There are two Commonwealth bills, and complementary legislation will be necessary in each Sta te. It is considered the State legislation can be covered by one act, and one object of the discussions was to secure uniformity among the States. The Wheat Industry Stabilization Bill provides the mechanism for carrying out the plan I have outlined, and for co-operating with the States in all necessary matters. The Wheat Export Charges Bill completes the work by providing for the charge which forms the growers5 contribution to the bill. Difficult problems will be met in .administration. I am confident that 'they will be overcome by the partnership of Commonwealth and State;,, and, because of our war-time experience, Australia has a detailed knowledge of its wheat industry. That knowledge can be used for the benefit; of our farmers in the years to come.

The plan is an attempt to deal fairly with the wheat-growers of Australia, and it breaks new ground. We are trying to put the industry soundly on its feet for the future. There are between 60,000 and 70,000 wheat-growers concerned, and their welfare depends on the demand of countries overseas for Australian wheat. We do not know what the future will bring, but we are making sure it will not bring the depressed conditions of the pre-. war years. With that provided, there need be no fear for (he future, nor for the ability of Australian growers to hold their own in the world's markets.

The general principles I have outlined are. now almost beyond dispute, and no competent body of opinion opposes them seriously. However, I do know quite well that there is a cleavage of opinion in matters of detail. Differences on details have caused the failure of stabilization proposals in the past, and I hope that now, when wheat-growers are nearer than ever before to a sound stabilization plan, the parliaments of Australia will ensure that they get it. Within the plan there is room to meet the needs of the future. The growers' contribution can bc. adjusted so that it will be decreased if the trend of prices allows. The regulation which the grower accepts willingly can be lightened if the world wants more of our wheat. The plan is flexible and can be adjusted to meet fairly what the future may bring. It will meet our needs in the way which is best for our growers, and the fairness of its provisions will appeal to wheat-growers. I am hopeful for the future of the industry, and now that the fighting has finished I look forward to a world market which can absorb ali the wheat and other food we can .produce. The world needs to be fed better, and, if it is, regulation will be directed to getting maximum .production. We must take precautions to prevent the return of a depression period. Having taken them, we can then work for prosperity with the knowledge that the mistakes of the past can be avoided, and a high standard of prosperity reached.

The Wheat Charges Bill, which will be introduced later, provides fpr a maximum contribution of 50 per cent., or a lower rate if prescribed, of the difference between the guaranteed price of 5s. 2d. and the average export price in any one year or such part of the export price as is prescribed. It is proposed for the current year, the 1945-46 crop, that the contribution be 50 per cent, of the difference between 5s. 2d. and 9s. 6d. bagged. The average export return is estimated to be- 10s. Growers will therefore be paid from the pool on the following basis: - 5s. 2d. a bushel for domestically consumed

Wheat Industry[20 June, 1946.] Stabilization Bill 1946. 1669 wheat, and for export wheat 5s. 2d. a bushel plus 50 per cent. of the difference between 5s. 2d., the guaranteed price, and 9s. 6d. - which is 2s. 2d.; and a further 6d. on export wheat, this being the difference between 10s. and 9s. 6d. It is estimated that, for the whole of the wheat marketed local and export, the grower will receive 6s. 7d. a bushel f.o.r. at ports bagged.

Summarized, the two bills provide for the following: -

1.   The preservation over five years of a price of 5s. 2d. a bushel f.o.r. at ports bagged for all wheat consumed within Australia.

2.   A guarantee by the Government of a minimum price for export of 5s. 2d. a bushel f.o.r. at ports bagged.

3.   When the export price exceeds the guaranteed price, growers to contribute to a fund to an amount not exceeding 50 per cent. of the difference between the export price and the guaranteed price of 5s. 2d.

4.   When the export price falls below 5s. 2d., the fund will be called upon to provide the amount necessary to bring the export price up to 5s. 2d.-

5.   If and when the fund is exhausted in any one year, the Government under its guarantee will provide, out of general revenue, the funds necessary to bring export prices up to 5s. 2d.

6.   For the current harvest, 1945-46 crop, the Government proposes that the grower will be paid on export wheat 5s. 2d., plus 2s. 2d., plus the excess of export returns over 9s. 6d. Under this arrangement, it is calculated that, for the whole of his sales, export and local, the grower will receive 6s. 7d. a bushel f.o.r. at ports bagged.

7.   The scheme, including the guarantee, is to operate for five years. During its currency, however, reviews will be made with a view to continuing it under conditions which may or may not he revised, beyond five years.

8.   The plan is designed to provide for stabilized returns over a period of years. Funds will be held on account of growers in years of high prices and paid out in years of low prices. But the Government underwrites the scheme to the extent of guaranteeing that, whatever be the rise or fall of the market over five years, the farmer will get a return not less than 5s. 2d. a bushel f.o.r. bagged at ports.

Debate (on motion by Mr. Menzies) adjourned.

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